Political Entrepreneurship and the Democratic Allocation of Economic Resources

Political Entrepreneurship and the Democratic Allocation of Economic Resources
Holcombe, Randall
2004-10-18 00:00:00
Political entrepreneurship occurs when an individual acts on a political profit opportunity. These profit opportunities can be divided into two categories: productive, and predatory. Productive opportunities enable entrepreneurs to profit from enhancing the efficiency of government, while predatory opportunities enable entrepreneurs to profit from forcibly transferring resources from some to others. This analysis shows that political institutions tend to favor predatory over productive political entrepreneurship, and shows that what is sometimes referred to as political exchange does not have the same efficiency characteristics as voluntary exchange in private markets.
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Political Entrepreneurship and the Democratic Allocation of Economic Resources

Abstract

Political entrepreneurship occurs when an individual acts on a political profit opportunity. These profit opportunities can be divided into two categories: productive, and predatory. Productive opportunities enable entrepreneurs to profit from enhancing the efficiency of government, while predatory opportunities enable entrepreneurs to profit from forcibly transferring resources from some to others. This analysis shows that political institutions tend to favor predatory over productive political entrepreneurship, and shows that what is sometimes referred to as political exchange does not have the same efficiency characteristics as voluntary exchange in private markets.